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Does Religion Affect the Economy?

This article is about this paper on "Religion and Economic Growth." The study was done at Harvard by Robert Barro and Rachel McCleary. The conclusions are interesting.

The most striking conclusion, though, is that belief in the afterlife, heaven and hell are good for economic growth. Of these, fear of hell is by far the most powerful, but all three indicators have a bigger impact on economic performance than merely turning up for church. The authors surmise, therefore, that religion works via belief, not practice. A parish priest might tell you that simply going through the motions will bring you little benefit in the next world. If Mr Barro and Ms McCleary are right, it does you little good in this one either.

Indeed, Mr Barro and Ms McCleary go further. They find that church-going, after a certain point, is (in an economic sense, anyway) a waste of time. They argue that higher church attendance uses up time and resources, and eventually runs into diminishing returns. The "religion sector", as they call it, can consume more than it yields.

All this is intriguing, but does religion make much difference? Japan, where there are many sects but little fear of hell, has grown far faster since the second world war than the Catholic Philippines. Officially atheist China is growing at a cracking pace. Presumably, what your religion is matters as much as whether you are religious: has anyone theorised about a Catholic work ethic? And if religion does have an effect, is a 20-year period long enough to find it?

I think this kind of analysis is difficult for several reasons. Mainly because it is tough to determine cause and effect. Also, though, because people have different degrees of religiousness. Two people could have very different views of what it means to be religious, and two people living at very different levels of religious committment could both call themselves committed.